Budget, Finance, and Economic Development Committee Meeting – April 1, 2026

The Budget, Finance, and Economic Development Committee (BFED) convened on April 1, 2026, at 9:05 a.m. to deliberate on the mayor's proposed fiscal year 2027 budget (BFED-1) and to receive the fiscal year 2025 single audit and annual comprehensive financial reports (BFED-2011). The meeting included opening remarks, public testimony, detailed presentations from the Department of Finance, bond counsel, and the county's external auditors, and discussion of audit findings and corrective actions. The chair noted that the proposed budget totals $1.6 billion, includes 90 new positions, and accounts for 500 vacancies countywide. Carryover savings are $174 million. The committee deferred both agenda items and set deadlines for follow-up questions.

Public Comments & Testimony

• Jake Carton (Maui Indivisible): Expressed concern that the Maui Police Department's proposed $140 million budget (a 10% increase) does not address MPD’s repeated illegal signing of federal contracts (ICE, etc.) and failure to comply with state sunshine laws. Urged the council to tie funding to compliance audits and quarterly reporting. Noted $5.5 million in savings in MPD from the previous year.
• Jim Lingford (Maui resident): Proposed a governance software system called "Maui OS" to track all county expenditures, including CDBG and other funds, to improve transparency and empower council oversight. Submitted a pitch deck and supporting documents.
• Travis Aaron Liggett (Maui resident): Described personal illness after a wastewater plant tour, noting that disinfection is not required for treated wastewater. Proposed two budget amendments totaling $6.1 million to add disinfection at South Maui and Kīhei plants. Stated that zero medical professionals he consulted understood disinfection is not mandatory.
• Royal House of Hawaii (on the audit item): Asserted that all Hawaii lands are allodial and royal patented, and questioned the authority of the county to issue bonds or create debt against those lands. Demanded compensation for descendants.

Discussion Items – BFED-1: Proposed Fiscal Year 2027 Budget

• Revenue Overview: Deputy Director Zelinski presented projected revenues of $1.616 billion, similar to FY26. Major sources: general fund (61%), water fund (10%), bond revenues (12.5%). Real property tax revenues estimated at $660.2 million, with tier adjustments to offset value increases and provide relief for owner-occupied and long-term rental properties. Transient accommodation tax (TAT) revenue projected at $65 million, stable despite declining assessments. General excise tax increased to $75 million based on prior year actuals.
• Countywide Costs: Director Martin presented countywide costs at $389.9 million, an 11% decrease due to reductions in supplemental transfers, affordable housing, and emergency funds. Fringe benefits include ERS pension contributions (up to $84.6 million), health plan (EUTF) at $36.5 million (including a collapsed $10 million supplement), and a reduction in terminal pay. The county's other post-employment benefits (OPEB) liability is now fully funded, reducing the annual required contribution (ARC) to $35.8 million.
• Bond and Debt: Bond issuance and debt service presented, including a new line item for arbitrage expense ($2.5 million) related to prior low-interest bonds. Bond counsel Sean Tierney and municipal advisor Kurt DeCrinis discussed the county's strong credit rating, options for water revenue bonds, and community facilities districts (CFDs) as alternatives to general obligation bonds to preserve bonding capacity.
• Questions from Members:
  • Member Batangan inquired about the Department of Finance's oversight role at the Department of Water Supply, referencing a fraud assessment finding. Finance noted ongoing improvements and a new internal control contractor position.
  • Member Paulton questioned the conservatism of fuel tax and TAT estimates given global economic uncertainty. Finance affirmed estimates are conservative.
  • Member Johnson questioned the rationale for real property tax tier changes, particularly the 15% reduction for the highest owner-occupied tier. Finance explained it aims for revenue neutrality and to align with average home values.
  • Member U Hodgins asked about the plan for $174 million in carryover savings. Budget Director Milner stated it is allocated within the FY27 budget, with efforts to recognize more unanticipated revenue to reduce future carryover.
  • Member Cook asked about the sustainability of tax increases for bonding capacity. Bond counsel noted current debt service is under 10% of operating expenses, and no tax increase was needed for the last bond issue.
  • Member Senensi asked about reducing salary funding for long-vacant positions. Budget Director noted some departments rely on vacancy savings for overtime, so cuts may impact operations.
  • Member Rollins Fernandez asked about expansion positions to address audit findings. Finance confirmed two new positions (grant specialist and accountant) are intended to strengthen internal controls.

Discussion Items – BFED-2011: Annual Comprehensive Financial Report and Single Audit Reports

• Presentation by NNK CPAs: Dwayne Takeno and Christian Hara presented the fiscal year 2025 audit results. The county received an unmodified (clean) opinion on financial statements. Three internal control findings were reported (two material weaknesses, one significant deficiency), all repeat findings from prior year: (1) TAT system limitations, (2) internal controls over financial reporting, (3) controls over capital assets. The county did not qualify as a low-risk auditee due to prior year findings, but compliance with major federal programs (Housing Choice Vouchers, Emergency Watershed Protection, Drinking Water State Revolving Fund) was clean.
• Finance Department Response: Deputy Director Zelinski acknowledged the findings, noting that a new TAT software system is being implemented (expected go-live October 2026) and that staffing shortages (especially in accounts) are being addressed through new hires. A new revenue manager, Paul Nyhart, is leading the TAT system upgrade.
• Questions from Members:
  • Member Senensi asked about the corrective action for a loan misclassified as an expenditure in the affordable housing fund. NNK confirmed it was corrected.
  • Member U Hodgins asked whether planned corrective actions are sufficient to clear the findings next year. NNK noted that remediation often takes 2–3 cycles and progress will be evaluated.
  • Member Cook asked whether the audit covers cross-departmental efficiency. NNK clarified it is limited to financial reporting.
  • Member Rollins Fernandez asked about succession planning for finance vacancies. Deputy Director Zelinski indicated informal efforts are underway, and recent hiring bonuses have improved recruitment.
  • Member Batangan commended the Department of Water Supply for a clean audit and asked about TAT taxpayer confusion (filing in wrong county). Finance explained that without property addresses, verification is difficult; the new software will require TMKs and addresses.

Key Outcomes

• Both agenda items (BFED-1 and BFED-2011) were deferred. The committee will reconvene on April 6, 2026, to continue budget deliberations with departments for Fire, Public Safety, and Housing.
• Deadline for Department of Finance to respond to written questions: April 6, 2026 (accounts section responses by April 8). Committee members' follow-up questions due: April 7, 2026 (for accounts, April 9).
• The committee directed staff to transmit a request to the administration to consider factors beyond the debt limit when deciding whether to bond projects or pay cash.
• The chair announced upcoming community meetings: Upcountry district meeting (April 1 evening), Pāʻia community meeting (April 2), and a meeting at Helene Hall (April 6).